By Kirstin Ridley
LONDON (Reuters) - The former boss of Tom Hayes asked a colleague at his employer UBS (VX:UBSG) to ensure the Swiss-based bank kept Libor interest rates high in 2007, Southwark Crown Court in London heard. Hayes is on trial on charges of manipulating Libor rates.
Yugo Matsumoto, a former Tokyo-based trader, contacted colleague Rolf Keiser to say senior manager Michael Pieri had asked for Libor rates, intended to reflect the rate at which banks lend to each other in different currencies over varying time frames, to be kept high, the court heard on Thursday.
Such a strategy is alleged to have been intended by traders to benefit their trading positions.
"I had Mike Pieri around asking if we can keep 3m (three-month rates) and 6m (six month) high for next week or so," he wrote on an internal UBS messaging system.
"OK, will do," Keiser responded in the chat in September 2007, shown on screens and read out to the jury in the trial of Hayes, a former yen derivatives trader charged by Britain's Serious Fraud Office (SFO) with eight counts of conspiracy to defraud between 2006 and 2010 by seeking to rig rates for profit.
Hayes has pleaded not guilty.
"Wow OK, no comment," Keiser adds.
Matsumoto late wrote to Pieri: "I just spoke with (former UBS rate submitter) Roger (Darin). We shouldn't have had the fixings in that high. He agrees we are going to be back in line today but since we are quite a long way off will bring them a bit lower even the day after."
Libor, the London interbank offered rate, is a benchmark that underpins around $450 trillion (290 trillion pounds) of financial contracts from derivatives to household loans worldwide. A panel of major banks are asked to contribute their borrowing estimates daily and the rate is calculated by discarding the highest and lowest quartile submissions and averaging out the rest to get a daily rate.
Hayes, 35, a former star trader in Tokyo at UBS and U.S. peer Citigroup (N:C), is the first person worldwide to face a jury trial over allegations he conspired to rig the rate for profit.
He has not yet laid out his defence in a trial that has been scheduled to run well into August. But he told SFO investigators that knowledge of Libor manipulation was widespread, the court has heard.